Correlation Between Maithan Alloys and Jindal Drilling

Can any of the company-specific risk be diversified away by investing in both Maithan Alloys and Jindal Drilling at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Maithan Alloys and Jindal Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Maithan Alloys Limited and Jindal Drilling And, you can compare the effects of market volatilities on Maithan Alloys and Jindal Drilling and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Maithan Alloys with a short position of Jindal Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maithan Alloys and Jindal Drilling.

Diversification Opportunities for Maithan Alloys and Jindal Drilling

0.44

Correlation Coefficient

Maithan Alloys  Jindal Drilling

Very weak diversification

The 3 months correlation between Maithan and Jindal is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Maithan Alloys Limited and Jindal Drilling And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jindal Drilling And and Maithan Alloys is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Maithan Alloys Limited are associated (or correlated) with Jindal Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jindal Drilling And has no effect on the direction of Maithan Alloys i.e., Maithan Alloys and Jindal Drilling go up and down completely randomly.

Pair Corralation between Maithan Alloys and Jindal Drilling

Assuming the 90 days trading horizon Maithan Alloys is expected to generate 4.69 times less return on investment than Jindal Drilling. But when comparing it to its historical volatility, Maithan Alloys Limited is 1.27 times less risky than Jindal Drilling. It trades about 0.01 of its potential returns per unit of risk. Jindal Drilling And is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  75,255  in Jindal Drilling And on October 6, 2024 and sell it today you would earn a total of  2,925  from holding Jindal Drilling And or generate 3.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.59%
Values	Daily Returns

Maithan Alloys Limited  vs.  Jindal Drilling And

Maithan Alloys

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Maithan Alloys Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Maithan Alloys may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Jindal Drilling And

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jindal Drilling And are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating forward indicators, Jindal Drilling disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maithan Alloys and Jindal Drilling

The main advantage of trading using opposite Maithan Alloys and Jindal Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maithan Alloys position performs unexpectedly, Jindal Drilling can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Jindal Drilling will offset losses from the drop in Jindal Drilling's long position.

The idea behind Maithan Alloys Limited and Jindal Drilling And pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.